Reports: UK Government In Talks To Sell RBS Stake To Abu Dhabi

The UK government, which has an 82 percent stake in Royal Bank of Scotland Group Plc (RBS.L,RBS), is in talks to sell upto one third of its holding in the lender to Abu Dhabi, reports said.

The government bailed out RBS about three years ago, by investing 45.5 billion pounds, after the lender was driven to the verge of collapse by its purchase of ABN Amro. The UK has been discussing the sale with Abu Dhabi sovereign wealth funds for the past few months.

The shares being sold could vary between 10 percent and one third of the government's stake in RBS. A sale to Abu Dhabi at this time is likely to be unprofitable, as the lender's stock trade at a much lower value than it did when the government bought the stake.

The shares were valued at about 50 pence each when the Treasury bought them. The stock closed at 27.75 pence on Monday.

One positive aspect of the deal would be that a part-sale to Abu Dhabi could trigger the interest of other buyers in the private sector, which in turn could drive up the stock's price to a break-even level.

British lender Lloyds Banking Group Plc. Friday reported higher profit in its first half, benefited by increased net interest income and margin as well as lower impairment. Looking ahead, the company lifted its net interest margin forecast.

Electronic Arts Inc. (EA) on Thursday reported an increase in profit for the first quarter, reflecting continued strong digital revenues, with both earnings and revenues topping Wall Street estimates. However, shares of the company fell over 4 percent, after having detailed a weak outlook.
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